By CLEMENT NWOJI, Abuja
With the establishment of insurance practice in Nigeria dating back to as far as 1921 via of its introduction by by the British Colonialists with the Royal Exchange Assurance Company which was first to open its office, followed by other foresighted investors venturing into insurance businesses, it is expected that the sector would have by now been one of the pillars of the finance and business sectors of the economy as obtained in advanced countries of the World.
But this was not to be, even with the establishment of an apex regulatory body, the National Insurance Commission (NAICOM) in 1997, forces of conservatism, anti-growth elements and those opposed to transformation of the sector to enhance its radical development and thus boost the sector’s annual contribution to the nation’s Gross Domestic Product ( GDP) have held it back and captive with all manners of opposing antics. Consequently, various innovative ideas, programmes and projects introduced by successive chief executives of NAICOM had been stifled by one reason or the other, leading to the sector to remain as a toddler when compared to its sister regulatory bodies in finance sector such as the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), Securities and Exchange Commission (SEC), Nigeria Stock Exchange (NSE) among other existing apex regulatory bodies even outside the finance sector.
Among some of the recent past innovations intended by NAICOM to shore the sector out of the woods but which were abruptly aborted by ill-informed opposing forces include:
Tier Based Minimum Solvency Capital (TBMSC) meant to enhance specialisation of insurers. The policy would have taken effect in 2018 but was aborted. Another policy was the attempted regulatory requirement for the segmented recapitalization of the insurance companies meant to shore up the capital base of the respective insurance companies and entrench the insurers on sound financial footing to handle high risk policies and be able to pay claims in event of any loss by the insured. It was also suddenly halted in 2021
Now, the most recent was the Federal government’s halting of purchase of a N4 billion property by the National Insurance commission (NAICOM) in Abuja which is to be used for dual purposes of being office accommodation and a training institute. But not minding the foresighted utility value of the proposed purchase of the building by NAICOM and despite the fact that the Federal Executive Council (FEC) had earlier given its approval for the building to be acquired, Federal government suddenly gave into pressure from the same forces which had kicked against introduction of innovative measures intended to develop insurance practice in Nigeria and make the sector competitive in world ranking.
However, taking into consideration that among all the regulatory authorities in the finance sector, only insurance sector/NAICOM (the regulator) does not have a befitting office accommodation and training institute, the sectors’ stakeholders are of the opinion that latest explanation by the commission on the due process followed in the purchase of the property and the dual purposes for which the commission intends to use the property for, the acquisition of the property is a step in the right direction. They described the ensuing agitation on possible non-payment of staff salary after the purchase and probe by some board members as part of the usual ploy often instigated to frustrate successive NAICOM Chief Executives and retard insurance development whenever the regulator attempts to bring innovative changes towards uplifting the status and standard of the industry .
Aggregate opinions of experts in insurance industry who spoke to OPTIMUM TIMES, pointed out that the Federal government is prone to listening to frivolous agitations from few members when issues of interest meant to develop insurance industry is about to be implemented. They cited that this informed the frequent interference and interruption of policy implementations such as the recapitalization of insurance companies which was last done in 2007. According to the experts, this has made recapitalisation in the industry an impossibility and has kept the entire industry at a ridiculous capital base level to the extent that today, capital base of a Microfinance bank is higher than capital base of most insurance underwriting firms. This, they said ought not be the situation as insurance forms are expected to be the risk bearers and supporting pillar to the nation’s economy.
They recalled that following similar agitations which culminated to the halting of the segmented recapitalization of insurance companies in Nigeria in 2021, the country is now licking its wounds as inflation and downturn in economic activities have wiped off the current capital base value of underwriters.
It is worthy of note that the implementation of key aspects of the 2009 – Market Development and Restructuring Initiative (MDRI) by the Commission and the industry operators are targeted at uplifting the insurance market standard and promote its competitiveness. Thus, the need for repackaging of their operations, refining and restructuring of the industry’s products and rebuilding of physical structures housing the various insurance firms.
This has resulted to good number of world class buildings being commissioned by NAICOM in the industry after the MDRI launch. These include: the Leadway Assurance building in Iponri, NEM insurance building along Ikorodu road, former WAPIC Insurance building now Coronation Insurance building along Awolowo road, the Insurance house at 5 Moloye street Yaba which housed the National Secretariat of the Nigerian Council of Registered Insurance Brokers and the latest being the magnificent insurance house built by the Nigerian Insurers Association (NIA) situated at Saka Tinubu, Victoria Island Lagos, and more are still coming up.
If players under NAICOM’s regulatory purview are rebranding its physical structures with befitting office complexes, one stands right to question the cogent rational for aborting an almost concretised acquisition of a dual role building structure suitable for attracting international recognition and patronages by virtue of its being a proposed training academy in actuarial science for insurance practitioners and regulators in Africa.
For certain, the need for such academy is long overdue given long years of advent of insurance practice in Nigeria coupled with the fact that other regulatory bodies in Finance sector such as CBN, SEC, among others have their respective training academy. This, not only contributed to stimulating their respective growth, erased conservative and outdated mindset approach to their various fields of specialisation, but also enabled them to domesticate and keep abreast with international best practices so much far ahead of the insurance sector.
One cannot forget in a hurry that such replicate of frivolous agitations, complaints and petitions; often instigated by self centered individuals rather than for comprehensive interest of the sector had robbed the sector of innovative policies for advancement. This is just as former Chief Executives of NAICOM: late Emmanuel Chukwulozie and Oladipo Bailey, and Alhaji Mohammed Kari were unceremoniously booted out of office for attempting to introduce and implement one innovation or there other. This time around, under the leadership of Mr Sunday Thomas, parochial interest groups have not given up their antics.
Even as the Federal Government through the Minister of Finance, Mrs Zainab Ahmed, has stopped further process towards acquiring the building and subsequently set up probe panel headed by the Permanent Secretary, Ministry of Finance, to investigate the entire processes so far, most especially, the property valuation and whether it followed due procurement process, NAICOM has made presentation alluding to the transparent compliance.
NAICOM in a statement explains: “That the management of the Commission through the Honourable Minister of Finance, Budget and National Planning presented to the Federal Executive Council presided over by His Excellency, President Muhammadu Buhari, GCFR an Unfinished property for approval to be acquired as NAICOM Academy and office accommodation following the approval by the immediate past Governing Board of the Commission.
“All documents relating to the property clearly state that the property was in an unfinished state.
The Commission had prior the FEC approval, obtained a “No Objection” from the Bureau of Public Procurement (BPP) following the valuation of the property by the Federal Ministry of Works and Housing.
“Adequate due diligence was conducted on the property for acquisition and all relevant approvals were secured by the Commission
Provision was made in the 2022 approved annual budget of the Commission for the purpose of acquiring the building for the Commission. The building is to serve the dual purpose of housing the newly established NAICOM Academy which is an initiative of the present leadership of the Commission to
address knowledge gap in the insurance sector regulation and supervision not only in Nigeria but across Africa and beyond and also serve as the new head office of the
Commission.
“In order to address the problem of low insurance penetration, entrench the culture of insurance in every part of the country and enhance the effectiveness of its surveillance in all the geopolitical zones of the country, the expansion of the Commission’s infrastructural facilities is inevitable thus the Commission requires a befitting Office accommodation to curtail any future office space crises. This clarification has become necessary to clear any doubt in the minds of the public with respect to the process followed by the Commission in its efforts at acquiring the property.”
But for how long will the Federal government continue to yield to the whims and caprices of few frivolous agitators each time any radical innovative policy is introduced in insurance sector and interrupt the process, only time will tell. Hope, development in Nigeria’s insurance sector is not jinxed?
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